SEC and CFTC

Overview of Programs

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was signed into law in July 2010. The Dodd-Frank Act established important incentives and protections for whistleblowers who provide information to the U.S. Securities and Exchange Commission (“SEC”) regarding violations of securities laws and the U.S. Commodity Futures Trading Commission (“CFTC”) regarding violations of commodities laws.

Whistleblowers who report securities law violations will receive a substantial and mandatory reward if the SEC or any other government authorities recover more than $1 million based on that information. The Dodd-Frank Act establishes a similar whistleblower reward program for the CFTC.

For more information about how the SEC Whistleblower Program works, please see our SEC Whistleblower FAQ.

Rewards and Protections

Under the Dodd-Frank Act, a person who voluntarily provides the SEC with original information that leads to a successful judicial or administrative enforcement action yielding monetary remedies of over $1 million must be awarded between 10% and 30% of the total monetary remedies assessed by the SEC. A number of factors are considered in determining the total amount of the reward, including the degree of assistance the whistleblower provides.

The law specifically states that employers may not fire, demote, suspend, threaten, harass or discriminate against a whistleblower. Whistleblowers who suffer from employment retaliation may sue for reinstatement, back pay and any other damages that occurred.

Whistleblowers may report fraud anonymously, as long as they have retained a lawyer to represent them. In some cases, their identities may remain unknown even to the SEC and the CFTC until the time comes for the payment of a reward. This is the strongest confidentially provision available in any of the federal whistleblower programs, including “qui tam” cases under the False Claims Act and the Internal Revenue Service (“IRS”) whistleblower program.

Common Types of Fraud

While not an exhaustive list, these are some of the most common types of reportable fraud under the SEC Whistleblower Program:

Fraudulent or unregistered sale of a security

Ponzi schemes

Insider trading

False or misleading statements about a company or its finances

Theft or misappropriation

Robbins Geller Rudman & Dowd LLP is committed to fighting for our whistleblower clients in their courageous efforts to combat fraud. We are dedicated to ensuring that our clients receive the compensation and protection they deserve. If you are aware of any securities, commodities, or tax law violations or fraud on the government and would like to consult with us on a confidential basis about a potential whistleblower case, please contact Jonah H. Goldstein or James E. Barz.